Karlsruhe verdict on three Adwords legality challenges

Now it is Germany’s turn to pronounce on whether search engine use of a competitor’s registered trade mark as a keyword (or “Adword” to use the Google service name) infringes that trade mark. Remarkably, not just one but three cases were before the Federal Court, as Bjoern Mann of Osborne Clarke Cologne reports.

The Federal Court of Justice issued a press release announcing its ruling in three cases concerning different variations of the established practice of using a competitor’s company name or trademark as a keyword for the Google AdWords technology.

The Court made final decisions only in two of the cases, where it found that the used AdWords were not infringing under the specific circumstances, and referred the third, most interesting case to the European Court of Justice for a preliminary ruling on the interpretation of the Trademark Directive. The full grounds of the decisions have not been published as of yet, but the press release contains a good summary of the most important points.

Printed circuit board abbreviation

The first case involved the owner of the trademark “PCB-POOL” and a company that had registered “pcb” as an AdWords keyword. “PCB” is a common abbreviation for “Printed Circuit Board”, a type of wiring board for electronic appliances. The Federal Court of Justice held that the term “pcb”, even though part of the protected trademark, was used in a merely descriptive manner to designate a specific type of circuit board – which as such was not owned by or protected for the benefit of the plaintiff – and for this reason alone, its use could not constitute a trademark infringement.

"Beta Layout" not registered

In the second case, the defendant had used the expression “beta layout” as an AdWords keyphrase, which was attacked by a competing corporation, Beta Layout GmbH. However, that company had not registered its name as a trademark, so that it was merely protected as a company name under German law. The Court found the defendant’s use of the words “beta layout” non-infringing since such use did not create any risk of confusion, which would have been a condition of granting injunctive relief. The Court held that potential customers did not automatically assume that the advertisements displayed on Google’s search results pages were necessarily purchased by the entity whose name had been used as a search term.

"Bananabay"

Finally, the third case involved the use of an entire registered trademark, "Bananabay" used for adult entertainment products. The Court considered that the use of an entire trademark as an AdWord by a direct competitor of the actual trademark owner would be infringing if such use could be considered “use as a trademark” in the legal sense. However, the answer to this crucial legal question – whether use of a word as an AdWords keyword constitutes “use as a trademark” – depends on the interpretation of the Trademark Directive. The Court therefore could not finally decide the matter, but had to refer it to the European Court of Justice for a preliminary ruling.

Why this matters:

The Federal Court of Justice’s decisions in cases one and two are hardly suprising. And even though the Court could not finally rule on the most interesting legal question of “use as a trademark” – which has previously been decided both ways by lower German courts – it might have hinted by its decision in the “Beta Layout” matter that it is willing to accept the use of third-party trademarks as AdWords provided that there is no risk of confusion. We will follow the matter and provide an update once the full grounds of the decisions are published. Check back to marketinglaw.co.uk to stay informed!